Energy stocks were on the rise, after California-based Chevron announced that it was acquiring Anadarko Petroleum Corp. for $33 billion or $65 per share, Kallanish Energy reports.
The deal will create a 75-mile-wide corridor across the most attractive acreage in the Delaware Basin in West Texas and New Mexico, extending Chevron’s leading position as a producer in the Permian Basin.
Chevron will also benefit from Anadarko’s deepwater Gulf of Mexico assets and will gain a world-class resource base in Mozambique to support growing liquefied natural gas development.
The announcement came on Friday.
Anadarko shareholders will get 0.3869 shares of Chevron and $16.25 in cash for each Anadarko share.
The total enterprise value of the transaction is $50 billion.
The acquisition of Anadarko will “significantly enhance” Chevron’s Upstream portfolio and further strengthen its leading positions in large, attractive shale, deepwater and natural gas resources basins, the company said in a statement.
The company will also benefit through Western Midstream Partners, a successful midstream company whose assets are well aligned with the combined companies’ upstream positions./
“This transaction builds strength on strength for Chevron,” said Michael Wirth, Chevron’s chairman and CEO in a statement.
“The combination of Anadarko’s premier, high-quality assets with our advantaged portfolio strengthens our leading position in the Permian, builds our deepwater Gulf of Mexico capabilities and will grow our LNG business,” he said. “It creates attractive growth opportunities in areas that play to Chevron’s operational strengths and underscores our commitment to short-cycle, higher-return investments.”
He added, “The transaction will unlock significant value for shareholders, generating anticipated annual run-rate synergies of approximately $2 billion and will be accretive to free cash flow and earnings one year after close.”
Said Anadarko chairman and CEP al Walker, “The strategic combination of Chevron and Anadarko will form a stronger and better company with world-class assets, people and opportunities.”
He said he was confident that Chevron will accelerate the value of Anadarko’s assets.
Chevron said it plans to divest $15 billion to $20 billion of assets between 2020 and 2022. The proceeds will be used to reduce debt and return additional cash to shareholders.
The acquisition is structured as 75% stock and 25% cash. Chevron will issue about 200 million shares of stock and pay about $8 billion in cash.
Chevron will assume debt of about $15 billion.
The deal has been approved by both boards of directors and is expected to close n the second half of 2019.
After closing, the company will continue to led by Wirth and will remain headquartered in San Ramon, California.
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